Just twenty years ago it would have been impossible (or at least very difficult) to buy and sell properties in a different market from where you resided… unless you had deep pockets and a huge team.
Now… someone with just $2,000 and a good bit of grit can wholesale properties virtually.
How?
That’s what we’re going to show you in this guide.
First, we’ll discuss what virtual wholesaling is and how you can mitigate the risk involved. Then we’ll show you the 11 steps involved in wholesaling properties from the comfort of your sofa.
Let’s dive in!
By the way, since you’re serious about this real estate investing business, we’ve got a free gift to help you be more successful. It’ll show you real-world tactics for finding and closing deals. Get it below!
What is Virtual Wholesaling?
Virtual wholesaling is the same process as traditional real estate wholesaling, except you do it virtually — in any market, from any market.
In the same way as wholesaling, you find the deals, put them under contract, and then assign the contract to another investor who closes on the property.
But you do all of that over the phone and on the internet… without ever even seeing or visiting the properties you’re wholesaling.
The appeal is obvious.
With virtual wholesaling, not only are you able to stay home and do deals… but you’re able to operate in whatever markets you want. You’re not limited to the place you live.
This means you can wholesale where there’s more opportunity.
Okay… But What is “Wholesaling” Real Estate?
To understand virtual wholesaling, you first need to understand wholesaling itself.
Put simply, wholesaling real estate is when you find a deeply discounted property and then sell it to another investor at a higher price.
You don’t do any repairs or improvements to the property… you simply “flip” the purchase agreement to another investor for an assignment fee (usually between $5,000 to $15,000) as profit.
Why would another investor purchase the properties you find?
Well, because they’re looking for properties to invest in and they’ve likely got deep pockets — they’re happy to pay you a finder’s fee to snag the deals you find.
It’s not uncommon for real estate wholesalers to make upwards of $5,000 per deal and to do several deals per month. So you can see the potential.
If you want to learn more about wholesaling before diving into virtual wholesaling specifics, check out our complete wholesaling guide.
How Can You POSSIBLY Flip Houses Sight Unseen?!
This is the biggest question real estate investors have when they’re thinking of wholesaling virtually.
But the truth is that there are a lot of ways to protect yourself and mitigate risk when you’re flipping homes sight unseen.
To give you an idea of this works in the real world, check out the video below where Ryan walks through a virtual flip (it’s not so much virtual wholesaling as it is virtual flipping… but you’ll get the idea).
The first thing you’ll want to do to protect yourself is to resolve to do a full-blown professional inspection on all your deals before they close — this will only cost you $300 to $500 but it can save you tens of thousands of dollars.
Here are a few more things we recommend doing…
- Hire a Local Expert — It’s always a good idea to hire a local real estate agent to go look at the property and give you their opinion of its condition, the area it’s in, and what it’s worth.
- Adjust Your Contract — In your purchase agreement, it’s a good idea to give yourself an “out” and to include stipulations that allow you to adjust your offer based on the findings of a professional inspection. Agree to pay earnest money ($500 or more) if you back out of the contract. This will make the homeowner more likely to sign while also lowering your risk.
The key to virtual wholesaling is to hire and trust other experts… and to minimize risk by giving you flexibility in the purchase agreement you and the homeowner sign.
With that… virtual wholesaling starts to look a whole lot less risky.
11 Steps to do Your First Virtual Wholesale Deal
Now let’s dive into the nitty gritty.
How can you wholesale homes virtually?
Start by watching the video below… and then read the 11 steps.
This is the fool-proof process real investors use to do deals anywhere from the comfort of their sofa.
Step 1. Choose Your Market
One of the main benefits of virtual wholesaling is that you’ll be able to operate in the market of your choice.
So it’s worth spending a little bit of extra time thinking about which markets have the best opportunities.
In fact, we already did that research for you!
Here are some of the best cities in the U.S. for wholesaling real estate…
- Houston, Texas
- Austin, Texas
- Dallas, Texas
- Rochester, New York
- Atlanta, Georgia
- Denver, Colorado
- Jacksonville, Florida
- Miami, Florida
- Phoenix, Arizona
- Tampa, Florida
- Indianapolis, Indiana
- Orlando, Florida
- San Antonio, Texas
- Charleston, South Carolina
- Memphis, Tennessee
- Colorado Springs, Colorado
- Grand Rapids, Michigan
Step 2. Set a Realistic Marketing Budget
Wholesaling real estate is appealing to new investors because it’s relatively inexpensive to get started…
But it’s not free.
To virtually wholesale, you’ll need to pay for things like professional inspections as well as software for pulling data and running comps.
But your biggest cost will be your marketing budget.
Why?
Well… how else are you going to find deals?
The best, most proven way to find deals is by sending direct mail to high-equity absentee lists (meaning the owners have a lot of equity and aren’t currently living in the home).
Typically, you’ll want to spend about $2,000 to secure one or two deals.
So we recommend starting with a budget in that ballpark.
$2,000 will allow you to send 2,000 – 3,000 mailers, which should result in about 30 – 40 calls and 1 to 2 deals closed (those are general numbers based on most wholesalers experience).
Step 3. Assemble Your Arsenal
Before we go any further, there are some tools you’ll want to have.
Here they are…
- Prosptream — This will allow you to pull tons of real estate data so you can send targeted direct mail campaigns. Get an account over here.
- Ballpoint Marketing — That’s us! Most mailers get thrown away… but not our hand-written (with real pen and ink) campaigns. Get yours over here!
- Contracts — You’ll want to get your contracts in order. You need a purchase agreement and an assignment contract.You can download purchase agreement and assignment contract templates for free over here.
That’s all you need for now!
Down the road, as your business grows and you start doing more deals per month, you might also consider the following tools…
- REsimpli — The best CRM for real estate investing that we know of.
- Call Porter — For answering and screening your inbound calls.
- Carrot — For building an online presence for your digital marketing efforts.
Step 4. Build a Cash Buyers List
Finding good deals is an important part of wholesaling real estate.
But finding high-quality cash buyers is just as important.
What good, after all, are those deals if you have no one to flip them to?
High-quality cash buyers are people with…
- Verifiable proof of funds
- A strong track record of closing on deals
- A good relationship with the wholesaler (you)
Normally when wholesaling, you’d look for cash buyers in the following ways…
- Attend Foreclosure Auctions — This is a great way to find cash buyers because they’re already used to the buying process and they have the funds readily available.
- Network With Local REIA Groups — This is another great way to meet potential cash buyers who are actively looking for deals in your market.
- Check With Title Companies — Many title companies work with cash buyers on a regular basis, so they can be a great resource for finding deals.
But that’s a bit more difficult when virtually wholesaling.
Check out the video below to learn how Ryan Dossey finds cash buyers with nothing but a computer and the internet.
Step 5. Send Targeted Direct Mail
As we already mentioned, spending $2,000 to send direct mail is going to be how you’ll find most of your deals.
The problem is that most mailers get thrown away.
That’s why here at Ballpoint Marketing, we created handwritten direct mailers (robot-written with real pen and ink) specifically for agents and investors.
Get your hand-written postcards now!
These things get record-high response rates.
And if you buy our postcards, then you just upload the addresses where you want to send them and we’ll ship them directly from our warehouse in St. Louis (for our letters, you’ll need to send them yourself to get the local postmark).
Easy peasy.
But how do you pull a list to mail?
Check out this video from Ryan Dossey to learn how to pull the same mailing lists he uses in his real estate investing business (you’ll need a Propstream account)…
Step 6. Talk to The Seller
After you’ve sent direct mail campaigns, your phone is going to start ringing.
These people are interested in selling their property fast for cash — or at least they’re interested in hearing what you’re cash offer might be.
But before you can make a cash offer, you need information.
So the majority of your first call with a lead should be full of questions and answers — the person on the other end should do way more talking than you.
Here are some questions you want to ask…
- Why do you want to sell?
- How much are you hoping to sell for?
- How much do you owe on the property?
- What is the quality of the property?
- What would I need to repair and/or update if I bought your house?
Honestly, though, that’s just a start.
The more questions you ask, the better you’ll understand the condition of the property and the easier it’ll be to calculate comps and your max cash offer (more on that soon).
Go room by room.
What is the condition of the living room? The kitchen? The flooring? The windows? The basement?
So on and so forth.
This is absolutely critical when you’re virtual wholesaling.
You’re going to get professional inspections done later… but these questions are important so you can start making some upfront calculations.
Pro Tip: As you scale and grow, you can use Call Porter to answer the phone so you’re only spending time talking to the highest quality, most motivated leads.
Step 7. Run Comps
When a real estate investor talks about “running comps”, they’re talking about determining the ARV or After Repair Value of a property — this is how much the home should be able to sell for once it’s repaired.
And you can run comps without leaving your sofa.
Here’s a video on how to run comps using Propstream…
Here’s another video on how to run comps using Zillow…
The next number you’ve got to figure out is the cost of repairs.
This part might seem difficult without actually seeing the home for yourself, but so long as you collected tons of information from the homeowner, you will be able to make some basic calculations and create a contract with stipulations that allow you to adjust your offer based on data you collect during the professional inspection.
As a starting place, you can use our 10/20/30 rule of thumb…
- If the seller says the property is perfect, assume $10 per square foot in repair costs.
- If the seller says the property is mediocre, assume $20 per square foot in repair costs.
- If the seller says the property is seriously distressed, assume $30 per square foot in repair costs.
This is a quick way to get a general idea of how much the home will cost for repairs.
For more accurate estimates, check out our full guide to estimating rehab costs — in that, we show you five proven ways that professionals estimate rehab costs.
Step 8. Determine Your Max Offer
Why have we done all of the above estimating and calculating?
Because, as a virtual wholesaler, you need to make offers that leave room for…
- Repair costs
- Your profit
- Your cash buyer’s profit
In many ways, real estate investing is just a mathmatical game.
Whoever has the best calculations wins.
Fortunately, there’s a simple way to figure out what your max offer on a property should be — that is, the maximum amount of money you should offer a homeowner on their property.
It’s called the 75% rule.
This is a formula that’s used by many real estate investors to ensure they make a hefty profit on the properties they purchase.
It states that a real estate investor should never pay more than 75% of the ARV of a property, minus the cost of repairs.
Now, remember, you’re wholesaling homes. This means your cash buyers will be using the 75% as well, so you’ll need to also deduct your profit from your calculations.
Let’s pretend that you determine the ARV of a property to be $250,000. Your repair estimates are about $30,000 (you’re not the one repairing the home, but this number is still important for proper calculations).
You want to make $8,000 on this deal as the wholesaler.
Let’s crunch the numbers…
((.75 x $250,000) – $30,000) – $8,000 = $149,500
In this case, your max offer on the property would be $149,500 and you would aim to get your cash buyer to purchase the property for 157,500, netting you $8,000 profit as the wholesaler.
Step 9. Make Your Offer
You’ve got your max offer.
Now it’s time to approach the seller.
Tell them what you’re able to pay for the property after calculating the cost of repairs and running comps on the home. Feel free to dive into the details if the seller is open to it.
And don’t forget to follow-up!
90% of your deals won’t be done when you first make your offer… they’ll be accomplished during a diligent follow-up process.
Step 10. Get The Property Inspected
At this point, you’ve made your offer, negotiated, and got the property under contract.
But that contract has stipulations that allow you to adjust your offer based on what a professional inspector finds.
And it’s important — particularly when virtually wholesaling — to make use of that clause.
A full-blown inspection will usually cost between $300 to $500, but it can save you tens of thousands of dollars.
They’ll come back with a list of things that need to be fixed and you’ll be able to discuss those things with the seller, adjusting your offer to account for new information.
Step 11. Close The Deal
If the seller accepted your offer and the inspections checked out (or your renegotiated and agreed upon a different price), then it’s time to tell your cash buyers about the deal.
If you’ve got a good deal, it shouldn’t take long to find a cash buyer willing to purchase the property.
To pass the purchase agreement to your cash buyer, you’ll use an assignment contract (don’t forget to add in your assignment fee).
And that’s it.
You’ve closed your first deal!
Final Thoughts on Virtual Wholesaling
Virtual wholesaling is a great way to get into the real estate investing game without a lot of money or experience.
You can do deals from anywhere in the world and you don’t need to worry about repairs or renovations.
However, there are some risks involved that you need to be aware of before getting started.
Make sure you do your due diligence and research any market you’re thinking of wholesaling in — even if you’re not planning on visiting the properties in person.
If you can overcome the initial learning curve and build a good system, virtual wholesaling can be a great way to make money in real estate.
Oh! And before you go, don’t forget to snag your free gift below!